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Evergrande set to sell part of stake in property services unit

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A man drives a cart past apartment buildings at China Evergrande Group’s Life in Venice real estate and tourism development in Qidong, Jiangsu province, China, on Tuesday, Sept. 21, 2021.

Qilai Shen | Bloomberg | Getty Images

Indebted developer Evergrande is set to sell part of its stake in its property services unit, the second asset sale in as many weeks as the liquidity-squeezed property giant scrambles to raise cash.

Trading in shares of Evergrande and Evergrande Property Services was halted Monday morning. In a filing with the Hong Kong exchange, Evergrande said it requested the trading halt ahead of an announcement about a “major transaction.”

Evergrande Property Services said that the announcement constitutes “a possible general offer for the shares of the Company.”

Chinese developer Hopson also suspended trading of its shares, citing an impending announcement of a “major transaction” to acquire the shares of a Hong Kong-listed company, without specifying. Chinese state media Global Times reported, citing unnamed media reports, that Evergrande will sell about 51% of its property services arm to Hopson for more than $5 billion.

Last week, Evergrande said it will sell a $1.5 billion stake in Shengjing Bank to a state-owned asset management firm.

Evergrande’s debt has stoked investor concern as it warned twice it could default, roiling markets. The property giant has also missed interest payments on two offshore bonds in recent weeks, leaving overseas investors in limbo. So far, the firm has remained silent on those payments.

Buckling under the weight of more than $300 billion in debt, Evergrande has been trying to offload stakes in other assets.

It sold property units to suppliers and contractors to offset some of its outstanding payments. As of Aug. 27, those outstanding debts amounted to around 25.17 billion yuan ($3.8 billion), according to Evergrande’s latest financial statement.

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Vishnu Varathan, head of economics and strategy at Mizuho Bank, said that “targeted and partial asset disposal to meet obligations is a fairly low bar.”

“The real question is whether there will be sustainable financing/cash-flow arrangements to keep the property sector as a going-concern,” he told CNBC, referring to functioning businesses generating cash-flows rather than being squeezed by liquidation.

Varathan added: “The wider point is that with a wall of obligations, restoring confidence is key. Whereas the general direction is still pointing to creditors making a bee-line and home-buyers being spooked.”

Evergrande also faces another deadline — a dollar note worth $260 million, issued by Jumbo Fortune Enterprises and guaranteed by Evergrande, was set to mature on Monday.

Non-payment would constitute a default and put pressure on the yuan, Varathan said.

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Carl Icahn says the market over the long run will certainly ‘hit the wall’ because of money printing

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Longtime activist investor Carl Icahn said Monday that the U.S. markets could see major challenges over the long term in the face of excessive money supply and rising inflation.

“In the long run we are certainly going to hit the wall,” Icahn said Monday on CNBC’s “Fast Money Halftime Report.” “I really think there will be a crisis the way we are going, the way we are printing money, the way we are going into inflation. If you look around you, you see inflation all around you and I don’t know how you deal with that in the long term.”

The Federal Reserve and Congress have unleased trillions of dollars in stimulus to rescue the economy from the Covid-19 pandemic. The central bank’s balance sheet swelled by more than $3 trillion amid its open-ended quantitative easing program, while the government has allocated over $5 trillion in stimulus to support Americans through the health crisis.

Icahn was adamant about not making a market timing call, but he believes one day over the long term the markets will pay the price for these policies.

On the back of these unprecedented stimulus programs, the S&P 500 has rapidly wiped out the pandemic-induced losses and rebounded to a new high. The equity benchmark is up more than 19% in 2021, sitting just 1.4% below its all-time high reached early September.

The massive money supply has partly contributed to rising price pressures in the economy. Inflation ran at a fresh 30-year high in August amid supply chain disruptions and extraordinarily strong demand.

The core personal consumption expenditures price index, which excludes food and energy costs and is the Fed’s preferred measure of inflation, increased 0.3% for the month and was up 3.6% from a year ago.

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N26 triples valuation to $9 billion, now worth more than Commerzbank

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N26’s logo seen displayed on a smartphone.

Rafael Henrique | SOPA Images | LightRocket via Getty Images

LONDON — German digital bank N26 said on Tuesday it has raised $900 million in a new funding round that values the firm at $9 billion.

That’s nearly three times N26’s valuation in its last private fundraising round and means it’s now worth slightly more than Commerzbank, Germany’s second-largest lender. Frankfurt-listed Commerzbank has a market cap of 7.6 billion euros ($8.8 billion).

N26, which counts billionaires Peter Thiel and Li Ka-Shing as investors, raised the fresh cash from Third Point, the hedge fund led by U.S. billionaire investor Dan Loeb, and Coatue, while Dragoneer also invested.

Founded in 2013, N26 is one of several start-ups in Europe seeking to challenge established banks with app-based checking accounts and little to no fees. Competitors include Revolut, which was recently valued at $33 billion, and Monzo.

Maximilian Tayenthal, N26’s founder and co-CEO, said the company plans to spend the extra cash on hiring 1,000 people globally and on launching new features like cryptocurrency trading.

“We want to bring in more people with a focus on product, technology and security,” Tayenthal told CNBC in an interview.

IPO ambitions

N26 now has 7 million customers across Europe and the U.S. and is on track to process $90 billion in transactions this year. The company recently acquired a banking license in Brazil, with a team of 40 employees already on the ground in São Paulo. N26 expects to roll out its app publicly in the country within the next year, Tayenthal said.

N26 now has enough “financial leeway” to prepare for an initial public offering, Tayenthal said, adding that he expects the firm to be “structurally IPO-ready” within the next 12 to 18 months.

“We have no hurry to go public,” Tayenthal said. “With increasing profitability, the kind of money we are raising right now, it really takes away any time pressure.”

With plenty of money available in private equity markets, many tech companies are opting to stay private for longer. Stripe, for example, raised funds at a $95 billion valuation earlier this year, making it one of the most valuable start-ups in the U.S.

Several European fintechs have managed to reach multibillion-dollar valuations amid surging investment activity. Revolut was recently valued at $33 billion in a funding round led by SoftBank, for example.

However, some investors have expressed concern about their ability to make a profit.

N26 is still loss-making, racking up losses of 216.9 million euros in 2019. Its European business lost 110 million euros in 2020, down from 165 million a year earlier. Tayenthal said N26 isn’t under pressure from investors to make a profit anytime soon.

Growing pains

Like other fintech companies, N26 has dealt with growing pains lately. The firm faced outcry from staff at its Berlin office last year, who at the time said that trust in management was at an “all-time low.”

Meanwhile, N26 was fined $5 million by BaFin, Germany’s financial services regulator, for being late to submit suspicious activity reports that are used by authorities to investigate money laundering.

On Tuesday, the bank said it had reached an agreement with BaFin to limit how many customers it onboards each month to a maximum of 50,000 to 70,000. The watchdog is expected to publish the decision in an upcoming order, N26 said.

Tayenthal warned the move is likely to slow N26’s growth significantly in the short term.

“For a couple of months, it will be material to the business,” he said.

As for work culture, Tayenthal says the firm has worked to improve employee representation at the company over the past year. The company has also begun to foster a shift toward flexible work during the Covid-19 pandemic, he added.

“We were actually very strong believers in having everyone in the office as much as possible. We are moving away from that,” Tayenthal said.

“There [are] obviously certain roles where you need to be in the office more regularly. And we also believe in bringing people together occasionally, but we are going to move to a more flexible model.”

N26 isn’t the only fintech embracing remote work. Revolut has said it will allow employees to work overseas for up to 60 days a year. Such moves are in contrast with major Wall Street banks like JPMorgan and Goldman Sachs, which are encouraging workers to return to the office. Some big European lenders are taking a more flexible approach.

N26 said it would expand its staff equity ownership scheme to cover all employees. Germany last year unveiled plans to reform its rules on employee stock options, a typical perk at many tech start-ups.

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Vestas to install prototype of ‘most powerful wind turbine’

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The shadow of a turbine from a wind farm is seen on a field in Brandenburg, Germany. As technology develops, the size of wind turbines is increasing.

Patrick Pleul | picture alliance | Getty Images

Vestas has announced plans to install a prototype of its 15 megawatt offshore wind turbine at a facility in Denmark.

In a statement, the company said the prototype, known as V236-15 MW, would be installed in the second half of 2022 at a test center in Western Jutland, Denmark. It is expected to start generating electricity in the fourth quarter of 2022.

The scale of the V236-15 MW is considerable. According to Vestas, it will stand 280-meters tall, with prototype blades measuring 115.5 meters in length. The prototype will be installed onshore in order to make access easier when it comes to testing.

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The turbine’s production output is expected to be 80 gigawatt hours a year. Vestas said this would be able to power roughly 20,000 European households, displacing over 38,000 metric tons of carbon dioxide in the process.

While Vestas claims its prototype “will be the tallest and most powerful wind turbine in the world once installed,” other companies are also developing their own massive turbines.

In August, MingYang Smart Energy released details of a huge new offshore wind turbine. Dubbed the MySE 16.0-242, MingYang’s turbine will have a height of 264 meters, a rotor diameter of 242 meters and a blade length of 118 meters. Its capacity will be 16 MW.

The Chinese company is aiming to install a prototype in 2023 before starting commercial production the year after.

Meanwhile, at the beginning of October, GE Renewable Energy said its Haliade-X prototype, which has been installed in the Dutch city of Rotterdam, had started to operate at 14 MW.

“The ability to produce more power from a single turbine means fewer turbines need to be installed at each wind farm,” the company said at the time. “In addition to less capital expenditure, this also simplifies operations and maintenance.”

The development of huge wind turbines has generated excitement in some quarters, but there are undoubtedly challenges too.

According to a recent report from industry body WindEurope, European ports will require new infrastructure and significant investment over the next few years to cope with the growth of the region’s offshore wind sector and its turbines.

In its report, published in May, the Brussels-based organization said Europe’s ports would have to invest 6.5 billion euros (around $7.54 billion) by 2030 in order to support the expansion of offshore wind.

Among other things, the report addressed the new reality of bigger turbines and the effect it could have in relation to ports and infrastructure.

“Upgraded or entirely new facilities are needed to host larger turbines and a larger market,” it said.

“They will need to cater for operating and maintaining of a larger fleet (including training facilities), for upcoming decommissioning projects and to host new manufacturing centres for bottom-fixed and floating offshore wind.”

Further to this, ports would need to “expand their land, reinforce quays, enhance their deep-sea harbours and carry out other civil works.”

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